Wall Street Bonuses to Take a Hit From This Year’s Trading Slump

(Bloomberg) -- The worst first half in a decade for Wall Street's trading desks is poised to hit year-end pay.

Bonuses for equities traders could fall as much as 15% from a year earlier, while their fixed-income counterparts could see a 10% drop, according to a report released Tuesday from compensation consultant Johnson Associates Inc. It predicts total incentive compensation for investment and commercial banks will drop in 2019 -- the third time in the last four years -- on geopolitical and rate uncertainty.

Traders and investment bankers “haven't had the revenues that I think they were expecting,” Alan Johnson, managing director of Johnson Associates, said in an interview. “Clients haven't come back, the volumes haven't come back.”

Bonuses for retail and commercial bankers could increase 5%, reflecting the benefit the biggest U.S. banks have been deriving all year from their Main Street operations.

Elsewhere on Wall Street, hedge fund and private equity bonuses could climb as much as 5% on positive flows. Asset-management bonuses will probably drop 5% on lower revenues, according to the report.

“The economy is clearly slowing, so how fast is that going to happen I think is the big variable,” Johnson said. “Is it going to slow at a nice, even pace or are we going to have a more dramatic decline?”

To contact the reporter on this story: Hannah Levitt in New York at hlevitt@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, Steven Crabill

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